Why fuel taxes aren’t going away even as prices hurt

Every time fuel prices go up, you feel it instantly at the pump, in delivery fees, and even in food prices. Now the government is making it clear that relief is not coming from scrapping the Value-Added Tax on petroleum products.

President Ferdinand R. Marcos Jr. said Monday the VAT on fuel will stay because it is quietly funding cash aid and subsidies that millions rely on.

Here is the tradeoff. As global oil prices rise, the government collects more VAT from every liter of imported fuel. That creates what Marcos called a “windfall” in revenue. Remove the tax, and that extra money disappears overnight.

The catch is who actually benefits. Scrapping VAT on petroleum products would mainly ease costs within the petroleum market, not necessarily deliver broad relief across the economy. Meanwhile, the government would lose a major funding source for programs that support sectors beyond transport.

That matters because public pressure has been growing from groups asking why assistance often focuses on transport workers. Marcos pushed back, saying the goal is to support the “entire society,” not just one sector.

In simple terms, the government is choosing between cheaper fuel today or sustained subsidies that help cover everything from daily expenses to broader economic recovery.

Marcos said current calculations still favor keeping VAT in place, arguing the benefits of nationwide subsidies and cash assistance outweigh the impact of higher fuel taxes.

Still, he left the door open. The administration is reviewing all options and could reconsider lowering VAT on certain products if the balance shifts.

For now, though, every spike in global oil prices means more tax collected and more funds for aid, but also continued pressure on your daily expenses.